Apple’s Heft Making Traders Nervous

By Teresa Rivas

While it’s no surprise that Apple (AAPL) has an outsize impact on the stock market, its recent run-up ahead of its expected product launch in September is making many big investors nervous.

According to S&P Dow Jones Indices’ Howard Silverblatt, Apple’s rapid ascent (its market cap has expanded more than 60% this year as it’s recently topped $620 billion) has given Apple even more influence in the market. As MarketWatchreports, Apple represented 4.85% of the S&P 500 and 24% of the information technology sector as of yesterday, when the shares hit another new high.

“That’s what has everyone nervous down here, meaning portfolio managers and traders. With the hype over Sept. 12, there’s a big profit to be protected here,” said Silverblatt speaking about the what many believe will be Apple’s unveiling of the iPhone 5 next month. “There is $226 billion dollars sitting in funds, meaning portfolio gains on paper. It’s not real until you take it,” said Silverblatt.

Add a Comment

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comment

There are 12 comments

AUGUST 21, 2012 4:34 P.M.

Yawn ..... .... .. . wrote:

ZZZZZZZZ ZZZ. ..... zzzzzz. ... Zzz zzzz zzzz z. Zz. ..... .. ...

AUGUST 21, 2012 4:56 P.M.

Anonymous wrote:

I don't get it. They talk about this huge run-up as though it was some huge amount in a short time. Apple was sitting at $644 in April of this year and has basically flat-lined since that time which is about four months. So now it's back over $644 and they're claiming the stock has climbed too fast. What the hell is the matter with these people? Priceline can do that much in a month and nobody says a damn thing. Do they expect Apple to climb only a dollar a day or something? Why is Apple making traders nervous? When the latest iPhone is introduced, it's guaranteed to sell in the many tens of millions of units in a relatively short time. What's the big risk? It's not as though Apple isn't going to make the revenue to support the current share price when target prices are much higher.

AUGUST 22, 2012 11:25 A.M.

Jim Morrison wrote:

This is the end.

AUGUST 22, 2012 1:35 P.M.

guest wrote:

620 million > billion.

AUGUST 22, 2012 1:45 P.M.

Drew wrote:

Time for a stock split. I don't know why Apple is dragging its feet on the matter.

AUGUST 22, 2012 1:46 P.M.

Paul wrote:

@Anonymous

60% in eight months is a big increase for any company and particularly so when you're talking a market cap Apple's size. Priceline isn't Apple. Your questions are answered in the article. Funds have over $200B of paper profits related to Apple. Paper profits != actual profits. And funds get rated by their owners quarterly, yearly, etc. So the concern is that regardless of whether they think Apple has the potential to go higher, which it does, those funds may be tempted to turn those paper profits into actual ones. And if they all decide to do it at once, you're talking a lot of selling pressure on Apple in a potentially compressed timeframe (like end of year or perhaps even pre fall if large funds anticpate a broad market selloff). That has implications for both Apple's share price and the markets generally (given the important of Apple to say the NASDAQ overall).

AUGUST 22, 2012 1:48 P.M.

Mark wrote:

@anonymous

The big risk, explained in detail in the article, is that funds are sitting on a 60% eight month run up in Apple worth more than $200B. Paper profits != actual profits until you sell. And if they all decide to sell at once to lock in some of those gains, you could see a lot of short term pressure on Apple share price.

AUGUST 22, 2012 1:59 P.M.

Scooter wrote:

In my mind it all comes down to where do you put the money after you sell? Is there really a better company then Apple (right now)? Do you put it in Google or Proctor and Gamble or Exxon - I would NOT. Maybe they just convert to cash and wait a few months to get back in. Oh and maybe they will get back in too late. If you have a winner, do you bail like a day trader? Not me. Not yet.

AUGUST 22, 2012 2:15 P.M.

Logic wrote:

If Apple matters so much then everyone should just go out and buy an Apple product. Otherwise stop producing FUD.

Emotion should never be part of any decision in life!!!

AUGUST 22, 2012 2:17 P.M.

Dan wrote:

Making traders nervous, huh? I have a solution: Stop trading and start investing.

AUGUST 22, 2012 9:47 P.M.

Anonymous wrote:

Must be a slow news day ...

AUGUST 24, 2012 4:58 P.M.

James wrote:

I want my management company to sell Apple which is selling less than 15 times forward earnings and buy Amazon which is projected to lose money in Q3. It's always good to get out of the stock with rising earnings and momentum and start all over with something else.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.